LPL Financial (LPLA) AI Stock Analysis

• Market Cap: $25.57B
• Dividend Yield: 0.37%
• Average Volume (3M): 1.09M
• Price to Earnings (P/E): 22.8
• Beta (1Y): 1.03
• Revenue Growth: 23.20%
• EPS Growth: 2.38%
• Country: US
• Employees: 9,000
• Sector: Financial
• Sector Strength: 85
• Industry: Financial - Capital Markets
• EPS (TTM): 14.03
• Shares Outstanding: 79,973,740
• 10 Day Avg. Volume: 595,821
• 30 Day Avg. Volume: 1,088,674
• PEG Ratio: 9.58
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 8.29
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $387.80
• Price Target Upside: 16.26% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

LPL Financial's overall stock score reflects its strong financial performance and strategic growth initiatives, such as the recent acquisition of Commonwealth Financial Network. The company shows robust revenue growth and a solid balance sheet, though liquidity challenges from capital expenditures and moderate valuation metrics slightly temper the outlook. The earnings call and corporate events score positively, reinforcing the company's growth trajectory amidst some technical analysis caution.

Positive Factors

Acquisition and Expansion

The acquisition of Commonwealth Financial Network for $2.7B is expected to enhance LPLA's scale and competitive position in the market.

Revenue Synergies

The deal is anticipated to bring revenue synergies, particularly through the transition to self-clearing, which will contribute significantly to the target EBITDA.

Negative Factors

Asset Outflows

The separation of large OSJs has resulted in significant outflows, with $8.5B out of the expected $20B occurring so far.

Financial Impact

Substantial onboarding and integration costs are expected, totaling approximately $485M, which will impact financials in the short term.

Share Repurchases

Share repurchases will be on hold in the near term due to the increased leverage ratio following the acquisition.

LPL Financial Business Overview & Revenue Model

Company Description

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market programs; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

How the Company Makes Money

LPL Financial generates revenue primarily through fees and commissions associated with the advisory and brokerage services it provides. The company earns asset-based fees from advisory services and margin interest, which are charged based on the assets managed or held in client accounts. Additionally, LPL Financial receives commission revenue from transactions executed on behalf of clients. The company also benefits from partner relationships, including revenue-sharing agreements with mutual fund firms, insurance companies, and other financial product providers. These partnerships contribute to LPL's earnings by providing access to a wide range of financial products that advisors offer to their clients. Furthermore, LPL Financial generates income from interest on client cash balances and other ancillary services.

LPL Financial Financial Statement Overview

Summary

LPL Financial shows strong revenue growth with a significant increase in gross profit margin, though net profit margin slightly decreased. The balance sheet is robust with increased equity and no debt, but cash flow concerns arise from a decline in free cash flow due to high capital expenditures.

Income Statement

LPL Financial has shown impressive revenue growth over the years, with a significant increase from $2.35 billion in 2021 to $12.39 billion in 2024. Gross profit margin stands strong at 90.0% for 2024, indicating efficient cost management. However, the net profit margin slightly decreased from 10.6% in 2023 to 8.5% in 2024, suggesting increased expenses or cost pressures impacting net profitability. Overall, the income statement reveals robust growth and solid profitability metrics.

Balance Sheet

The balance sheet shows a healthy improvement in equity, with stockholders' equity rising from $2.08 billion in 2023 to $2.93 billion in 2024. The debt-to-equity ratio improved significantly as total debt was eliminated by 2024. ROE is strong at 36.1% for 2024, reflecting effective utilization of equity in generating profits. The equity ratio at 22.0% indicates a moderate reliance on equity financing. Overall, the balance sheet is stable with a strong equity position and reduced debt levels.

Cash Flow

Cash flow analysis reveals a concerning decline in free cash flow from $109.3 million in 2023 to -$284.9 million in 2024, primarily due to a significant increase in capital expenditures. The operating cash flow to net income ratio decreased as well, indicating less cash generation relative to earnings. Despite these challenges, the company has effectively managed operating cash flows historically. Overall, the cash flow situation shows potential strain due to high capital investments.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
12.39B	10.05B	3.06B	2.35B	2.00B
	Gross Profit
3.37B	3.05B	1.95B	1.35B	1.10B
	EBIT
1.67B	1.63B	1.24B	601.33M	626.07M
	EBITDA
1.98B	1.99B	1.53B	832.02M	908.93M
	Net Income Common Stockholders
1.06B	1.07B	845.70M	459.87M	472.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.01B	541.76M	847.52M	495.25M	808.61M
	Total Assets
13.32B	10.39B	9.48B	7.99B	6.52B
	Total Debt
5.75B	3.96B	2.72B	2.81B	2.59B
	Net Debt
4.78B	3.50B	1.87B	2.32B	1.78B
	Total Liabilities
10.39B	8.31B	7.31B	6.32B	5.21B
	Stockholders Equity
2.93B	2.08B	2.17B	1.67B	1.31B
Cash Flow		Free Cash Flow
-284.94M	109.33M	1.64B	237.15M	634.41M
	Operating Cash Flow
277.59M	512.61M	1.95B	453.13M	789.94M
	Investing Cash Flow
-1.59B	-860.19M	-376.40M	-458.64M	-187.50M
	Financing Cash Flow
1.42B	-208.53M	-504.27M	278.84M	-275.19M

LPL Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 333.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPLA, the sentiment is Positive. The current price of 333.56 is above the 20-day moving average (MA) of 307.72, above the 50-day MA of 327.15, and above the 200-day MA of 291.33, indicating a neutral trend. The MACD of -1.82 indicates Negative momentum. The RSI at 54.10 is Neutral, neither overbought nor oversold. The STOCH value of 92.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LPLA.

LPL Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MKTX	78 Outperform	$8.40B	31.01	20.45%	1.33%	9.06%	6.10%
TW	77 Outperform	$33.54B	60.84	9.14%	0.30%	28.86%	29.26%
RJF	73 Outperform	$28.22B	13.26	18.91%	1.35%	11.79%	25.74%
LPLA	73 Outperform	$25.57B	22.79	42.26%	0.37%	23.20%	2.38%
SF	69 Neutral	$8.91B	16.50	13.32%	2.01%	12.85%	20.21%
Sector *	64 Neutral	$12.65B	9.74	8.04%	17044.64%	12.65%	-5.11%
JEF	59 Neutral	$9.73B	16.34	6.38%	2.97%	16.62%	139.24%

LPL Financial Corporate Events

LPL Financial Announces Acquisition of Commonwealth Network

On March 28, 2025, LPL Financial Holdings Inc. announced its agreement to acquire Commonwealth Financial Network for $2.7 billion in cash. This acquisition, expected to close in the second half of 2025, will integrate Commonwealth’s 2,900 independent advisors managing $285 billion in assets into LPL’s network. The move aims to enhance LPL’s service offerings and expand its market presence in the wealth management industry. Commonwealth’s CEO will join LPL’s Management Committee, and the company will retain its brand while benefiting from LPL’s scale and resources.